Wednesday, March 04, 2009

The Real Value of Buying Local

A one-on-one with Ibtisam Al Faruji - the woman heading up the Origin Oman, Buy Local campaign.

What’s Origin Oman all about?Origin Oman is a think, buy and eat local business initiative spearheaded by the Public Establishment for Industrial Estates (PEIE). In simple terms, it aims to preserve and enhance the economic, human and natural vitality of Oman’s communities by promoting the importance of purchasing locally made products and services.

Origin Oman certainly isn’t a militant 'buy only Oman' program. It’s a balanced and rational campaign that’s more about educating consumers and institutional buyers as to the availability of Oman-made products and services and the internal success stories many of Oman’s businesses are enjoying in the international markets. For example, Reem Batteries power London’s iconic red double decker buses.

We want to encourage people to think, buy and eat local. Indeed, we want to make sure consumers, businesses and institutional buyers ask the right questions before spending their money in a way that will hurt Oman’s economy. We want them to look around and see if there’s a reasonably priced quality local alternative available.

Isn’t Origin Oman protectionist? Not at all. The Origin Oman campaign is entirely about the free choices of consumers, businesses and institutional buyers. No one is being forced to buy local, and no tariffs or other burdens are being placed on non-local goods.

Some economists believe - incorrectly - that initiatives such as Origin Oman must mean putting up trade barriers or inducing consumers to buy more expensive locally-made goods and services. They also forget that economic models assume all consumers have perfect information. One way of looking at the Origin Oman campaign is that it gives consumers better information - about the availability of attractive local goods and services, and about the significant economic, social and environmental benefits of buying local.

Shouldn't we leave the market alone?A healthy market requires, as Origin Oman insists, that consumers fully gather information about available local alternatives before they make purchasing decisions, in full awareness that every Rial spent locally will have two to four times more benefit than a Rial spent non-locally. In fact, Origin Oman-style campaigns often turn out to be the best way to develop prosperous links to the global economy.

Why the recent interest in local products?The notion of local products is not a new principle. Most products start their life produced for local sale. The revival of interest in buying goods, food and services from closer to home is stimulated by desire for quality, originality, a concern for the environment and a will to invest in our local communities.

There has been a recent resurgence in interest in buying locally for a number of reasons. We have seen growing concern for the environment, for example, the transport required to bring products and produce to market. This is coupled with nostalgia for the kind of relationship that goes hand-in-hand with the selling of local products. Also, links to tourism have meant that people exploring new cultures take an interest in locally made products and fare, whether they are visitors from other countries or other parts of Oman.

The principle behind local products is that they should give that distinctive difference, offering the consumer a product which reflects their understanding of being locally provided. While there are differing definitions of what ‘local’ means, we should allow the consumer to make that decision. The key in much of this is the authenticity of the product and the trust generated by forming a relationship between manufacturer, grower and consumer.

When considering local products, it is important to note the effect that key trends and influences have over consumer choice. Consumers have varying levels of concern and desire about issues such as health and the environment. In terms of health, consumers increasingly seek out fresh, quality produce, in which they can invest a level of trust. The trust relationship in local foods is often reinforced by the direct selling relationship between producer and consumer. Additionally, consumers are becoming increasingly aware of a need to reduce food kilometres - the distance which goods and produce must travel to reach the market. There are also connected concerns over levels of energy use, and for this reason products which have low levels of energy use, or involving sustainable sources of energy have extra appeal to Oman-based consumers.

Are you asking people just to buy Omani?No, that’s not what the campaign is about. Of course local manufacturers, farmers and service providers keep more money in the local economy - but less obvious is just how much difference buying locally made products, produce and services can make. Research indicates that for every RO36 local retailers bring in through sales, businesses return RO25 to the local economy through salaries and benefits, purchase of goods and services like office supplies, marketing, PR, IT, advertising and accounting, profits to local owners and charitable contributions.

Indeed, research from San Francisco found that even the smallest shift in consumer spending can have a tremendous impact on the local economy. If 10% of residential spending were redirected toward local businesses, the study found, it would give San Francisco an RO75 million economic boost and generate nearly 1,300 new jobs.

Perhaps not coincidentally, we’re beginning with the goal of convincing consumers, businesses and institutional buyers to redirect just 10% of their spending toward locally made goods, produce and services - that would have a significant economic impact. In these turbulent economic times, it can make the difference between life and death for a local firm.

I guess that once the average Oman-based consumer, business and institutional buyer realizes they already buy local to some degree, whether that’s washing powder, confectionary, car batteries, cooking oil, ceramic tiles, vegetables or building materials, they will perhaps engage in the idea a lot more.

But does the local angle really matter? Yes, but perhaps not in immediate sales. Rather the local approach humanizes the interaction, and helps the consumer see that they may have more in common with a local company or brand than they had imagined - shared values or environmental views, for example. And that common ground can only get stronger over time. In my opinion, the overall economic, environmental and social impact of buying local is actually pretty astounding.